Investing in Africa: Defining the “Missing Middle”

U.S. financial institutions can both make money and help alleviate poverty in Africa and throughout the developing world by investing in Small and Medium Enterprises (SMEs) in those countries. Although microfinance has become extremely popular in the fight against world poverty and has continued to steadily grow despite the most recent financial downturn, not enough attention has been given to SMEs.

The “Missing Middle” is a phrase that has been used relatively loosely in economic development discussions. But what does the term “Missing Middle” really mean? For some, the term has meant “a lack of SMEs in the developing world.” For others, the term has meant “the lack of investable capital targeted at funding SMEs.”

No matter what the term the “Missing Middle” refers to, it is clear that a thriving SME base leads to substantial economic and social growth, and explains why this issue is so important to Africa and the developing world.

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